October 29, 1999

by Peter J.M. Orvetti

A Debt To Pay?
Celebrating The Surplus
Without Sanction
Medicine Baul

A Debt To Pay?

Judge Stephen M. Schwebel, president of the World Court, said Wednesday that a 1962 case before the International Court of Justice set a precedent that means that the United States is obligated to pay its past dues to the United Nations, AP reports. The United States may lose its seat in the UN General Assembly if it does not pay at least $350 million of its $1.8 billion debt by the end of the year. In the 1962 case, Schwebel said, several member states including the United States asked the court to clarify whether General Assembly members were obligated to pay assessments for peacekeeping operations.

Cliff Kincaid disagrees in the Cato Policy Analysis "The United Nations Debt: Who Owes Whom?": "Claims that the United States owes the United Nations more than $1 billion are false. No legal debt exists or can exist. The UN Charter does not empower the organization to compel payment from any member state. Even the notion that the United States owes money in the sense of a moral obligation is fallacious. It ignores the military and other assistance that the Clinton administration has provided the UN and for which the United States has not been properly credited or reimbursed. Over the past five years, that assistance has amounted to at least $11 billion, and perhaps as much as $15 billion. The administration has been diverting funds from federal agencies, especially the Department of Defense, to the United Nations. Allegations of debt have distracted attention from a disturbing administration policy of providing resources, personnel, and equipment to the UN without the advance approval of Congress. In effect, the administration and the UN have been conducting important elements of U.S. foreign and military policy and bypassing Congress's power of the purse. That tendency raises grave constitutional concerns…

"Congress might well decide that it is proper for the United States, not the United Nations, to fund the deployment of the 37,000 U.S. troops in Korea, even though they are technically there under UN authority. It may also be the case that Congress would want to fund the Bosnia deployment, although it is technically being conducted under the auspices of both the United Nations and NATO. The fundamental point, however, is that Congress, not the administration and the United Nations, has the constitutional authority (and responsibility) to make such determinations. In short, what Bartlett and his colleagues are arguing for is a full accounting and no 'debt' payments until the United States is given proper credit or reimbursement for its support of UN peacekeeping operations… There is no doubt that the United Nations would react negatively to such an inquiry. Since UN officials would undoubtedly claim that the organization could not repay the money or credit the United States, a period of intense and delicate negotiations involving the UN, the administration, and Congress would have to ensue. From the viewpoint of Congress, a continuing refusal to pay the UN 'debt' could provide additional leverage for forcing tough reforms on the United Nations in other areas as well as peacekeeping. That may be an unprecedented opportunity to finally compel the United Nations to downsize its operations and its bloated bureaucracy."

Celebrating The Surplus

The $123 billion federal budget surplus is a record high, AP reports, and also makes the first back-to-back surpluses since the Eisenhower years. The announcement of the surplus has both parties taking credit. President Clinton said American businesses and workers have benefited from lower interest rates, a shrinking national debt and a growing pool of investment capital, but acknowledged the surplus came entirely from Social Security.

"[W]hat should be done about a pending surplus on the unified budget?" asked Cato Institute Chairman William A. Niskanen in testimony before Congress in 1997. "My first reaction to this question, based on the dismal fiscal record of the past 30 years, is that you should not count your surpluses until they are hatched… however, I will suspend my usual skepticism to address how Congress may best respond to a growing surplus on the unified budget… My general advice on this issue is to use a pending budget surplus only to finance one or more major fiscal reforms. The flip side of this coin is that Congress must discipline itself against responding to a pending surplus in the way it responded to the O'Neill windfall -- by an inchoate mishmash of small spending increases and tiny tax cuts that characterized this year's budget deal. If Congress is not ready to address a major fiscal reform, a pending surplus should not be committed in any way other than to reduce the outstanding federal debt. My priorities, thus, place major fiscal reform ahead of debt reduction. On the other hand, I value debt reduction more than any of the new entitlements and junk tax cuts that often emerge when a surplus is in prospect.

"The most valuable use of a budget surplus, I suggest, would be to help finance the necessary transition from our pay-as-you-go social security and Medicare programs to advance funded individual retirement and medical insurance accounts. There should no longer be any doubt that such a transition is necessary. These two programs are on an unsustainable path, one that will not survive the retirement of the boomer generation without some combination of breaking promises to those who counted on these programs, huge increases in the payroll tax, or huge increases in the debt burden on subsequent generations. This is an issue that Congress cannot ultimately avoid, and the transition problem will be smaller the sooner it is addressed. Some part of the payroll tax revenues must be diverted to finance the individual accounts, and the magnitude of the necessary transition finance is the difference between the outlays necessary to maintain the benefits of those now retired plus those who choose to stay in the government programs and the lower payroll tax revenues. This transition finance problem eventually disappears when all future retirement benefits are prefunded."

Cato Institute President Edward Crane expressed similar views in a 1998 article, "What to Do with the Budget Surplus": "The projected surplus depends on revenue assumptions that are reasonable. But it also depends on a grossly optimistic assumption: that Congress and the White House will resist the itch to spend, no small concern given the fact that, this week alone, President Clinton has proposed a staggering array of expensive new initiatives… If by some miracle a federal budget surplus does materialize, under no circumstances should the president and Congress be allowed to use it to buy more goodies for favored constituencies. Rather, it should be used in only two ways: to cut taxes or to finance a transition to a privatized Social Security system, or both. Allowing people to keep more of their own money, instead of sending it to Washington, should be the highest priority. A tax cut ought to reduce the tax burden generally, not produce the kind of dumb, social engineering mess we find in last year's budget deal. That package enormously complicates the tax code, probably reduces economic growth and creates a variety of new special interests that would have an incentive to oppose any genuine tax reform."

Without Sanction

President Clinton waived certain sanctions against India and Pakistan Wednesday, AP reports. The waiver will allow development and military-training programs to continue; a waiver issued last year restored certain economic programs. The president has also lifted restrictions on activities of American banks in India and Pakistan. The sanctions were imposed in reaction to nuclear weapons tests by both nations in May 1998.

In "Two Cheers for India Sanctions", Aaron Lukas wrote, "In the past 30 years, U.S.-backed economic sanction schemes have failed in the overwhelming majority of cases. They're likely to fail against India, too; only modest economic punishment will be inflicted. Moreover, the purpose of additional sanctions is unclear. Indian leaders have already signaled that they will end testing and stop stockpiling plutonium if sanctions are lifted and they are allowed to buy U.S. civilian nuclear technology. That's a reasonable request, especially since India has never exported nuclear and missile technology to rogue regimes. Fortunately, many of the measures directed against India so far can't properly be called sanctions. Instead, they simply halt wasteful foreign aid and corporate welfare spending… It's time for Congress to realize that disrupting private business transactions is not an effective foreign policy tool. Sanctions damage domestic interests at least as much as the target country and have little chance of inducing policy changes."

Medicine Baul

The Justice Department has asked the Ninth U.S. Circuit Court of Appeals to reconsider a ruling that could allow seriously ill patients to use marijuana without being prosecuted, AP reports. The DOJ has argued that the federal legislature has declared marijuana to be a dangerous controlled substance that has no medical purpose.

In testimony before Congress in June, David Boaz discussed medical marijuana, providing evidence that Congress is wrong: "Prohibitionists insist that marijuana is not good medicine, or at least that there are legal alternatives to marijuana that are equally good. Those who believe that individuals should make their own decisions, not have their decisions made for them by Washington bureaucracies, would simply say that that's a decision for patients and their doctors to make. But in fact there is good medical evidence about the therapeutic value of marijuana despite the difficulty of doing adequate research on an illegal drug. A recent National Institutes of Health panel concluded that smoking marijuana may help treat a number of conditions, including nausea and pain. It can be particularly effective in improving the appetite of AIDS and cancer patients. The drug could also assist people who fail to respond to traditional remedies. More than 70 percent of U.S. cancer specialists in one survey said they would prescribe marijuana if it was legal; nearly half said they had urged their patients to break the law to acquire the drug. The British Medical Association reports that nearly 70 percent of its members believe marijuana should be available for therapeutic use. Even President George Bush's Office of Drug Control Policy criticized the Department of Health and Human Services for closing its special medical marijuana program…

Federal policy "encourages state and local enforcement officials to arrest and prosecute physicians suspected of prescribing or recommending medicinal marijuana and to arrest and prosecute patients who use such marijuana. And adding insult to injury, the policy also encourages the IRS to issue a revenue ruling disallowing any medical deduction for medical marijuana lawfully obtained under state law. Clearly, this is a blatant effort by the federal government to impose a national policy on the people in the states in question, people who have already elected a contrary policy. Federal officials do not agree with the policy the people have elected; they mean to override it, local rule notwithstanding--just as the Clinton administration has tried to do in other cases… One of the benefits of a federal republic is that different policies may be tried in different states. One of the benefits of our Constitution is that it limits the power of the federal government to impose one policy on the several states."